New home loans and Government payments

Discussion in 'Loans & Mortgage Brokers' started by AbleTasMan, 23rd Mar, 2020.

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  1. AbleTasMan

    AbleTasMan Well-Known Member

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    With a lot of Australian workers now going on the Government salary subsidy of $1100 a fortnight, will that be seen as proof of income by the banks if you're looking at getting a home loan?

    How do other people up to now on Government payments get home loans? Surely most Australians are now in a similar situation as they were, so it's a possibility?
     
  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    A lot ? How many ? You are guessing.

    No lender really counts govt benefits into a loan servicing calc. It's like counting support from the salvos as income

    While APRA says default won't count a loss of income will stop credit
     
  3. AbleTasMan

    AbleTasMan Well-Known Member

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    Ok, that's basically what I was wondering. But it's interesting from what I've just been reading that the ATO does count it as income and you get taxed on it. So it still is regular income.

    So how do people on government benefits secure home loans?
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    They don't!
     
  5. AbleTasMan

    AbleTasMan Well-Known Member

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    Actually not entirely true, I've been doing further reading and as long as you have a second income stream the Government benefits you receive can be taken into account when getting a home loan:

    Can I get a home loan using Centrelink funds? | Capita Finance

    However, in the current landscape that's impossible for everyone who's been laid off. For at least the next 6 months the government payments is all we'll have.

    How do you see this effecting the property market going forward? Do you think banks may "forgive" the second income for the time being to keep things moving?
     
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  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Its a tough space. Depends on the nature of the benefit,

    ta

    rolf
     
  7. Redom

    Redom Mortgage Broker Business Member

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    Yes banks do take into account lots of Centrelink types of payments.
    This is a short term supplement, so I dont think they'll take this one into account. I dont think there'll be too much demand for credit from those in this position either.
     
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  8. AbleTasMan

    AbleTasMan Well-Known Member

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    I didn't think so either, as I understand everyone will be looking to tighten their budgets.

    But for people sitting on cash do you think working with a mortgage broker it's possible at all to work around this as it's only a temporary "blip" in income caused by unprecedented measures? Or do you think it's not even worth trying until everything gets back to normal?
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    If your only income is centrelink payments I don't think you would be able to borrow, but if you still have a job, or there is a spouse with a job it is business as per usual. Whether it is a good time to buy or not is a different matter to consider.
     
  10. AbleTasMan

    AbleTasMan Well-Known Member

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    Right now is a terrible time to buy, I don't question that at all. I'm just doing everything I can now while I can (and have the free time) so that when the timing is right I don't miss out. If that means trying to arrange approvals for my future position or seeing what lender would be a good match for me and my circumstances. I already did miss out on a couple properties at the start of this year due to being unprepared, uninformed and time-poor.
     
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Actually it could be a good time to buy if prices are dropping - but they could drop further.
     
  12. AbleTasMan

    AbleTasMan Well-Known Member

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    This is exactly what I mean. I don't see them dropping overnight, but in 6-8 months it's reasonable to understand them dropping 20-40% in some areas. This is what I want to be prepared for now so I can take advantage of that in the future. I'm already in a pretty good position, I just can't prove income at the moment due to what's going on.
     
  13. AbleTasMan

    AbleTasMan Well-Known Member

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    So you're suggesting I go find me a wife and get hitched? Interesting :) Pity all the pubs are closed ;)
     
  14. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Try social media!
     
  15. AbleTasMan

    AbleTasMan Well-Known Member

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    Haha, isn't that for the kids and those looking for Insta-fame?